Back to the Blog Main Page
17/04/25
66
USD/CAD Soars Amid Powell’s Cautious Outlook and Steady Bank of Canada Rates
In the early hours of Thursday’s European session, the USD/CAD currency pair experienced a notable uptrend, reaching approximately 1.3885. The shift occurred following remarks from Federal Reserve Chair Jerome Powell, which indicated a cautious stance from the central bank regarding interest rates. Additionally, the Bank of Canada (BoC) made the decision to maintain its policy rate at 2.75% during its most recent meeting.
The uptick in the USD/CAD exchange rate can be attributed to Powell’s hawkish commentary and an increase in US retail sales. With the upcoming Good Friday holiday, trading volumes are expected to be lighter, reducing market volatility.
Powell’s statements highlighted the potential inflationary pressures from rising tariffs, coupled with their negative impact on economic growth. The central bank’s current position suggests a preference to pause and observe economic developments without rushing to modify interest rates. This perspective lowered expectations for a rate cut as early as June, thereby reinforcing the strength of the US dollar against its Canadian counterpart.
On the other hand, the BoC recently decided to keep its overnight rate steady, marking the first halt in its easing cycle that began last June. The bank pointed out the challenges posed by a weakening economic landscape, characterized by slowing consumer spending and overall economic uncertainty. Market analysts were anticipating a 50% likelihood of a return to rate easing in the next policy meeting scheduled for June, with expectations of two additional cuts by the end of the year, as indicated by recent surveys.
Furthermore, an uptick in crude oil prices may offer support for the Canadian dollar. As Canada stands as the leading oil exporter to the United States, an increase in crude prices typically resonates positively for the value of the Canadian dollar.
Promotions
